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June 19, 2019
Official Statement of Mr. Robert E. Murray, Chairman, President and Chief Executive Officer of Murray Energy Corporation, Relative to the Trump EPA’s Issuance of the Affordable Clean Energy Rule
Murray Energy Corporation (“Murray Energy”) applauds the Trump EPA for issuing the Affordable Clean Energy Rule, effectively repealing and replacing the disastrous and illegal Obama Clean Power Plan (“CPP”). All of Murray Energy’s coal operations will benefit from this new rule, because it sets reasonable carbon dioxide emission standards that do not force the premature retirement of more coal-fired generating units.
Murray Energy was the very first party to file a lawsuit challenging the Obama Clean Power Plan (“CPP”) in the case before the federal D.C. Circuit styled Murray Energy Corporation v. U.S. Environmental Protection Agency, D.C. Circuit Case No. 14-1112. After years of expensive litigation, Murray Energy was joined in the case by twenty-nine (29) states. The cases were consolidated in the case styled West Virginia v. U.S. Environmental Protection Agency, D.C. Circuit Case No. 15-1363. On February 9, 2016, the U.S. Supreme Court stayed implementation of the CPP, pending further judicial review. This was the first time in American history that the U.S. Supreme Court has intervened to stay, or temporarily block, an agency’s regulation before a lower court heard legal challenges to it, which speaks to the absurdity and illegality of the Obama CPP.
America enjoys an abundant resource of proven coal reserves. Coal is a critical component of America’ s energy resources and continued operation of America’ s coal-fired electricity generation fleet is absolutely vital to ensuring reliable, efficient and cost-effective supplies of electricity to the nation.
For over a century, coal-fired generation has been the safe, reliable, low-cost, and fuel- secure source of electricity in America, providing the baseload generation, as well as the capacity, reserve, and ancillary services that are absolutely necessary to maintain the integrity and reliability of our Nation’s power grids. The historical fleet of coal-fired generating units, particularly in the Midwest, has served the economy well, providing as much as eighty to ninety percent (80 – 90%) of in-state generation in many states over the years. Coal-fired generation has also served the commercial, manufacturing and industrial sectors of this Country, providing low-cost, reliable, high capacity and peak demand services that are absolutely necessary for American manufacturers to operate and to compete in the global marketplace.
Over the years, coal-fired generation has been less susceptible than other sources to both short-term and long-term fuel price variation and supply. Coal-fired generation has been the constant through the years of the Arab oil embargo, the natural gas shortages of the 1970’s and 1980’s, the ensuing volatility in natural gas prices thereafter, nuclear power regulatory challenges, and extreme weather conditions, most recently the 2014 Polar Vortex and 2018 Bomb Cyclones. Indeed, during the Polar Vortex, the PJM Interconnection, covering all or part of thirteen (13) states, carne within 700 megawatts of a major system disruption and the cost of producing electricity in the Midwest and mid-Atlantic area rose above $1,000 per megawatt-hour for the first time in American history.
During the 2018 Bomb Cyclones, the consequence of lack of fuel diversity was seen in New England ISO (NE ISO) pricing. Comparing the first half of January 2018 to the first half of January 2017, natural gas prices (Algonquin hub) were up from an average of $5.60 per MMBtu in 2017 to $22.78 per MMBtu in 2018, a 307 percent increase. Power prices (Mass Hub) were up from an average of $41.80 per megawatt-hour to $147.74 per megawatt-hour, a 253 percent increase. Also relevant was the over 7000 percent increase in use of oil for power generation as a result of supply constraints on natural gas due to the lack of storage and pipeline capacity. Dual fuel gas and oil plants had to switch to oil to meet load. Pricing was also up in PJM West, which had an average energy price of $119.53 per megawatt-hour in the first half of January 2018. The average energy price and price increases were higher in NE ISO than PJM West because the coal generation in PJM increased by about 10 percent in the first half of January 2018 which significantly reduced the increased generation required from oil.
There is no question that had it not been for the coal capacity in PJM, MISO and elsewhere the power prices would have been significantly higher. The new Affordable Clean Energy Rule helps to ensure that these coal-fired and nuclear power plants can continue to operate when we need them most, without the demagoguery of the Obama CPP, but instead, by using common sense to develop an energy policy for the United States of America.